Investors have never been this confident that the path for bond yields is lower, new data from Bank of America showed on Tuesday.

BofA's monthly fund managers survey showed some 80% of respondents see bond yields falling in 2024, the most ever captured by the firm.

"The big change in the November FMS was not the macro outlook, but rather the conviction in lower inflation, rates, and yields," BofA's data analytics team led by strategist Michael Hartnett wrote on Tuesday.

And should this conviction in lower bond yields in the year ahead materialize, it could serve as a catalyst for a stock market that has been challenged by rising yields.

"Yields, in our view, [were] the biggest challenge for this market," Truist co-chief investment officer Keith Lerner said last week, attributing the S&P 500's longest winning streak in two years to a recent fall in yields.

Yields have soared over the past several months, with the 10-year Treasury yield (^TNX) rising nearly 100 basis points from the start of August to mid-October, as fears of additional rate hikes from the Federal Reserve and a surprise increase in Treasury issuance spooked the fixed income market.

But after the 10-year yield touched nearly 5% in October, bonds have caught a bid in recent weeks as Fed commentary and a soft jobs report have investors increasingly confident that the central bank won't hike rates again.

On Tuesday, after the release of the Bank of America survey, the latest Consumer Price Index report showed prices increasing at their slowest pace in two years, which markets viewed as a welcome sign for the Fed.

Yields fell even further early Tuesday, with the 10-year yield falling more than 18 basis points to 4.4%.

If this intraday move holds, it would mark the biggest move in the bond market since investors sought the traditional "flight to safety" trade amid the regional banking crisis in March.

Also noteworthy in BofA's survey was an overall optimistic tone from market participants.

Investors now see a 76% chance the Fed is done hiking, which is the most convicted investors have been that the central bank's hikes are ending since the question was first asked in May.

Investors are also now overweight equities for the first time since April 2022.

"Worries about inflation and central banks is rapidly diminishing," Hartnett wrote.

Josh Schafer is a reporter for Yahoo Finance.

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